Your Best Tech Purchase is Probably the One You Haven't Heard of Yet

Raise your hand if you want to play Bama.  Me neither.  Raise your hand if you want to play the Cowboys - me too!  The Birds haven’t won at AT&T in seven years, time to exorcise those demons!

Just like the Cowboys falling short around this time every year, we find ourselves diving into the same annual budgeting routine. We map out next year's budget and dutifully include a line item for technology. Licenses, maintenance, development costs, upgrades - everything gets a perfect little line item with a precise number next to it.

And every year, as surely as Dak throwing an INT in the playoffs, the most valuable tech expenditure turns out to be something we didn't even know existed during budget season.

Gartner reports that 75% of enterprise technology budgets go to "keeping the lights on" - maintenance, licenses, existing commitments. But the real transformational opportunities emerge mid-year. 

Consider what happened to us in 2023:

• December 2022: lock in budget 
• March 2023, we started exploring how genAI could transform our loan and hedge abstraction process
• The costs weren't in our 2023 budget and they were substantial. But the potential ROI was impossible to ignore - we could cut abstraction time by 80%.
• Today, that investment has transformed our operations

That’s an extreme example because the money spent was so clearly justifiable.  But how many other opportunities have I missed because I haven’t built in cushion to my tech budget and said no mid-year?

Now I include "dry powder" in our tech budget every year.  I take the maintenance expenses, then add more for “innovation” spend, then add 25% more for cushion.  That results in reductions elsewhere, but I’ve realized I’m going to spend it anyway so I might as well be honest about it.  

Whether it’s an unexpected technology, an opportunistic hire, or a dramatic operational improvement, it’s been worth it.  

• A loan agreement that took 3 hours can now be abstracted in 15 minutes
• An SREO that took an hour is done in 1 minute
• A Hedge Confirm that took 15 minutes takes 15 seconds

Our tech stack in August will look different than what I planned in December.  That's not a bug - that's a feature. The question isn't whether unexpected opportunities will emerge, it's whether I'll be positioned to take advantage of them.

Or as our tech team likes to say, "our best technology purchase is probably the one we haven't heard of yet."  

Tech moves faster than our budgeting process—unlike the Cowboys' offense in November—so I always set aside some dry powder for whatever shiny new toy I’ll inevitably want mid-year.